Salaries as a cost of sale

Question asked by Richard Cooper 11 years ago

The default set of account codes has salaries (and related expenses like Pensions & NIC) listed as indirect costs. I need them listed as direct costs of sale.

  1. I can, of course, just add a new "salaries" account type under "costs of sale" with Salaries, pensions, NIC, etc accounts under that. Is that likely to cause any problems in future? For example if I start using open payroll at some point will it work with my custom accounts? Or does it assume I'm using account code 4001001.

  2. I can't seem to delete the default salary related accounts. The best I can do is hide them from the sales and purchase lists. Is that right?

  3. Are the default "PAYE/4001002" and "Employees' NICs/4001003" accounts important? The payroll docs don't mention them, so I'm not sure what they are for. Wouldn't employee deductions like PAYE and Employees' NICs always assigned to the salaries account?

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3 Replies

Salaries/4001001" and "Employers' NICs/4001004 is all I would do, I see no need for splitting it out further than that.

Best answer
11 years ago

Hi Richard,

Thanks for your question on Community.

  1. Yes you can use your own account code and in this case I would certainly think that that is the best thing to do. I do not believe there will be any conflict with OpenPayroll, but this can be tested.

  2. Unfortunately, you won't be able to delete the default account codes. What you can do however is to untick both the show in sales and show in purchases boxes. This will make them unavailable within the system, but they will still be visible in the Settings > Codes > All part of the account.

3, Yes those are very important as those are elements that need to be recorded in salaries and on the VAT return. The reason they are separate is that each has it's own rate and must be displayed individually.

Chris

11 years ago

Thanks Chris.

What makes "PAYE/4001002" and "Employees' NICs/4001003" important? Are then used automatically by some internal process? I plan to use the Payroll Transactions Processed Outside Clear Books procedure which doesn't use those accounts at all. So unless something internal uses them they are not going to get used.

Basically I'm trying to work out if I need to duplicate those accounts under costs of sale the same way I plan to duplicate "Salaries/4001001" and "Employers' NICs/4001004"

11 years ago

Salaries/4001001" and "Employers' NICs/4001004 is all I would do, I see no need for splitting it out further than that.

Best answer
11 years ago

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